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Thesis & Antithesis

A critical perspective on energy, international politics & current affairs

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Location: Washington, D.C.

greekdefaultwatch@gmail.com Natural gas consultant by day, blogger on the Greek economy by night. Trained as an economist and political scientist. I believe in common sense and in data, and my aim is to offer insight written in language that is clear and convincing.

09 May 2006

The Year of Energy that was

(This is an article I wrote for the SAIS Observer, my school's monthly newspaper; it summarizes nicely some of the ideas and events that have marked the year.)
This was the year of energy at SAIS: a year full of energy drama during which our sense of insecurity only increased. As SAIS began its year, oil cost $60/barrel; at year’s end, prices were over $72. In these nine months, SAIS grappled with the energy world—its limits and its implications, its present and future, its promise and its perils. The world was moving fast, and so was SAIS’ attempt to make sense of it all.

Our year began with Nick Butler, Vice President of Strategy and Policy Development for British Petroleum. This inaugural event in September laid the foundation for the year of energy. Mr. Butler made the case for energy - why it matters for students in international affairs. Implicit in his vision was the need to take an interdisciplinary approach to understanding energy, and the need to study the energy component of political issues as well.

In November, as Mahmoud Ahmadinejad called for Israel to be “wiped off the map,” Fatih Birol, chief economist at the International Energy Agency (IEA), presented the World Energy Outlook 2005 at SAIS. Focusing on the Middle East and North Africa, his concern was that insufficient investment could dramatically affect future prices. As Dr. Birol spoke, only Saudi Arabia had any spare production capacity—markets were tight, and incremental demand was outpacing incremental supply. Dr. Birol’s speech was meant to alert us to a looming shortfall - to highlight the topic with the hope to change it too.

As SAIS went to exams, out came SAISphere, our annual magazine. Energy was the theme, and our faculty probed the various issues that make up our energy world. SAIS students were pleased to read the profiles of SAIS alums and to see that many energy analysts come from SAIS. The publication reminded us why this is a great place to study energy - to probe interdisciplinary topics, to converse intelligently about derivatives as well as internal politics, to understand the energy side of China’s rise, as well as how regulation affects the price at the pump.

As we prepared to return from winter break in January, Gazprom – the fourth largest publicly traded company in the world and half-owned by the Russian government - cut off gas to Ukraine, an unkind new year’s gift from the country on whose energy we will become increasingly more dependent in the future. In the same month, George W. Bush declared that America is “addicted to oil,” refocusing the country’s dialogue on energy.

March was a busy month. The number of attacks against oil targets in Iraq reached 300 since the war began, extremists tried to blow up the Abqaiq facility in Saudi Arabia, the internal situation in Nigeria deteriorated, and America signed a nuclear deal with India. Meanwhile, SAIS hosted Claude Mandil, executive director of the International Energy Agency. His cautioned that energy use is unsustainable. At the same time, most solutions are unrealistic: there is no silver bullet and no single energy source will make the arduous transition painless. Gains will be made, but on the margin; serious tradeoffs are involved, between domestic and international politics, between the current generation and the next.

Over Spring Break, twenty-one students traveled to Houston for a first-hand look at the industry and to meet with its leaders. As they returned, the energy year was reaching its peak: a gala dinner with Pulitzer-Prize winner Daniel Yergin, one of the foremost authorities on oil. His vision was somber, commenting that we need to rethink energy security. The whole supply chain should be our focal point, not just foreign threats; we need a better way to integrate India and China, not just fear their ascent; and we need to remember that markets are part of the solution, not of the problem.

Ever looming this year has been the specter of a nuclear Iran. It is fitting then that the this year’s graduation speaker will be Nobel Prize winner Mohamed El-Baradei, director general of the International Atomic Energy Agency (IAEA), fresh off his return from Tehran. As the world commemorates the 20th anniversary of the Chernobyl accident, nuclear power is in the headlines, as are the fears of nuclear proliferation. Next year’s IEA World Energy Outlook will be devoted to the topic, showing the atom’s role in our energy future.

On the anniversary of Chernobyl, here is what the scientific journal Nature opined:

“The true lesson of Chernobyl … is not that nuclear power is unsafe, but that it is unsafe in the hands of a corrupt, unaccountable, irresponsible political system that fails to take reasonable measures to protect its citizens. The future of nuclear energy does not hinge primarily on the development of a safer reactor or a more geologically reliable waste repository, but on the ability of states to build public trust in their ability to safely implement and manage the technology.”

Therein lies the message of the year of energy: geology and technology impose physical limits; but everything else is for us to make. Our edge as students comes from our education here at SAIS - our ability to think deeply and widely, to probe within and connect between issues. The past nine months have made us think creatively about energy, and they have prompted us to engage with the world beyond. A good cause this is, and a year well spent.

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